How times have you heard this statement? In life, it’s always good to have a plan and stick to it. When it comes to Forex trading, having a plan couldn’t be more important.
First, you must plan your trade. What are the steps you must take before entering a trade? Do you know what you are looking for? Which currency pairs are your top priority? How many lots will you trade? How many pips do you want to allocate per day? Which hours of the day do you plan to execute your trades? How much of your account, percentage-wise, are you willing to risk per transaction? These are crucial questions we must all take into consideration before risking capital to trade Forex.
Secondly, you must stick you your plan. There may be times when temptation will step in and you will want to trade against the rules. I would advise against that unless you know with absolute certainty that the outcome will be profitable. Most times, trading against the rules can be a mistake. I have regretted making impulsive decisions in the past. For example, I traded USD/JPY yesterday as a sell solely on its movement to the downside and not taking any other factors into consideration. It turned out to be not profitable as the trend began to go sideways making the selloff short-lived. My timing was off and with the reversal in trend, the trade turned out to be a minor disaster. I exited the trade -41 pips. On the plus side, late last night/early this morning, I made 120 pips on EUR/AUD! I’d entered the trade early yesterday afternoon and after 6 hours or so of flip-flopping, it went positive and I reaped the benefits. This was because I stuck to my plan, not to mention my analysis of the pair was correct and it was just a matter of time before the trade became profitable. Sometimes you just have to stick these things out, even if you’re in the minus zone, because if you’ve done the proper analysis, you’re sure to be successful. The market can be volatile, it’s all about keeping your emotions in check and not allowing yourself to be rattled by minor fluctuations.
Hope this entry is helpful to you guys. Please feel free to comment on my blog, anytime. It’s good to hear feedback, how else will we keep on getting better, right?
Happy Thursday to everyone! 😀